IHS Technology analysis and commentary follows from the IHS Solar EPC and O&M Providers Report – North America – 2016, which is part of IHS North America Solar Intelligence Service.

Bottom Line

Megawatt-scale photovoltaic (PV) operations and maintenance (O&M) market revenue in North America was estimated by IHS to be $300 million in 2015, growing to $1 billion in 2020.

The three leading North American megawatt-scale PV O&M providers comprised 44 percent of the regional market in 2015. Each of the top three providers are vertically integrated — from development, to integration, to manufacturing and supply.

First Solar led the North American megawatt-scale O&M market in 2015, capturing over 25 percent of the market, followed by SunEdison at 11 percent and SunPower at 7 percent. SunEdison’s bankruptcy and the potential sale of its assets in North America could provide opportunity for O&M providers to grow their portfolios.

As utility-scale PV systems become larger, operators must comply with higher standards regulated by the North American Electric Reliability Corporation (NERC). IHS concludes that over 7 GW of PV currently under development from 2016 to 2017 in North America is likely to fall under NERC regulation.
Outlook and Analysis

Leading O&M providers are invested in providing long-term servicing for systems developed in-house and externally, whereas traditional system integrators are more interested in short-term arrangements immediately following project completion. Many systems are currently under short-term O&M contracts of one to five years, primarily covering projects through their initial tax equity investment phase.

Once systems are under long-term ownership, solving system downtime and maintenance issues increases in importance, as the project matures. Less system downtime over the life of a project requires more attention to preventative and condition-based maintenance, which incurs higher costs and requires higher O&M budgets.

In addition to the rush of new projects planned for completion in 2016 and 2017, SunEdison’s bankruptcy will likely cause some of its assets to go up for auction to interested buyers, presenting opportunity for service contracts to be renegotiated or new providers to step-in. The company’s gigawatt-scale operations portfolio in North America is at risk of being sold off, presenting opportunities for PV owners and operators with the budget and appetite for additional project acquisition.

As projects become larger, they also require more operations capabilities. Because larger systems have a greater individual impact on the grid, systems connecting more than 75 MW at a single interconnection point in North America are required to become NERC certified.

NERC certification requires operators to meet high standards to ensure the system integrity of the national electric grids, increasing the cost and investment of providing O&M to such systems. Only a handful of PV O&M providers have obtained NERC certification, including First Solar, SunEdison and SunPower, which results in fewer competitors for O&M contracts on these types of projects. IHS expects more service providers to enter this space as the market matures and grows by over 7 GW from 2016 to 2017, either directly by becoming certified with NERC or by partnering with certified operators.